On Tuesday, March 4, U.S. President Donald Trump addressed the full Congress for the first time in five years, and he had a clear opening message for not just the legislature but the entire country.
“Members of the United States Congress, thank you very much. And to my fellow citizens, America is back!” Trump said to a divided Congress, with raucous Republicans chanting “USA, USA, USA” to his left and Democrats sitting silent and stonefaced to his right.
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As in Congress, where America stands depends on where individuals sit.
But many economists are concerned about the Trump administration’s economic proposals, centered on a tariff policy that the president considers payback to other countries for overimposing tariffs on the U.S.
Trump announced tariffs this week on China, Mexico, and Canada, three of the country’s largest trading partners, effectively starting a trade war.
Related: China responds to tariffs with a shocking move
Economists say companies will pass tariffs to consumers via higher shelf prices. The tariffs have already prompted the three target countries to promise retaliatory tariffs on American goods.
(On March 5, the administration said that it would exempt auto imports coming through Mexico and Canada from tariffs for a month.)
Trump acknowledges consumers’ inflation concerns
Trump says he is aware of Americans’ financial struggles as living costs have been stubbornly high.
One concern that’s high on consumers’ list:
“Joe Biden especially let the price of eggs get out of control. The egg prices are out of control. And we are working hard to get it back down,” Trump said.
At the same time, many experts say that the outbreak of bird flu and its financial effects can’t be blamed on either the Biden or Trump administration. Regardless, it is now up to the new administration to fix the situation.
But eggs are just one of the U.S. staples seeing inflationary pressure.
January’s CPI report showed the annual rate of consumer-price inflation in the U.S. is now at 3%. That’s higher than most analysts had been expecting, and it’s hitting grocery aisles hard. The specifics:
- Food: increase 0.5%
- Energy: increase 1.1%
- Fuel oil: increase 6.2%
- New vehicles: unchanged
- Used vehicles: increase 2.2%
- Apparel: decrease 1.4%
- Shelter: increase 0.4%
- Transportation services: increase 1.8%
- Medical care commodities: increase 1.2%
Trump says he has a plan to fight inflation
Trump says he is focused on tamping down inflation.
His plans include slashing taxes, including extending the tax cuts he implemented in 2017—many of which are set to expire this year—and eliminating taxes on tips, overtime pay, and Social Security benefits.
“Among my very highest priorities is to rescue our economy and get dramatic and immediate relief to working families,” he said. During his speech Tuesday night, he mentioned “inflation” seven times and his plan to combat inflation multiple times.
He also said, however, that tariffs might cause “some disturbance” for consumers.
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However, economists say a number of his policy proposals work at cross-purposes.
The Trump administration wants to balance the federal budget, which economists say is extraordinarily tough.
Another “major focus of our fight to defeat inflation is rapidly reducing the cost of energy,” Trump said. He plans to reduce energy costs by sticking to the moniker “drill, baby, drill.”
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